US$50 trillion wiped out

'Asia was hit harder than other parts of the developing world because the region's markets have expanded much more rapidly,' the Manila-based bank said in a new study. -- PHOTO: AGENCE FRANCE-PRESSE

MANILA - THE global crisis wiped a staggering US$50 trillion (S$77 trillion) off the value of financial assets last year including US$9.6 trillion of losses in developing Asia alone, the Asian Development Bank said on Monday.

'This is by far the most serious crisis to hit the world economy since the Great Depression,' said ADB President Haruhiko Kuroda.

But he predicted Asia would be 'one of the first regions to emerge from it'.

In a study commissioned by the Manila-based lender on the impact of the financial crisis on emerging economies, it estimated the value of financial assets worldwide - currency, equity and bond markets - to have dropped by US$50 trillion in 2008.

It said developing Asia was hit harder - losing the equivalent of just over one year's worth of gross domestic product - than other emerging economies because the region has expanded much more rapidly.

In Latin America, losses were estimated at US$2.1 trillion. According to the study, the figures provide clear proof of the close connections between markets and economies around the world, leaving few, if any, countries immune to financial or economic fallout. A recovery can only now be envisaged for late 2009 or early 2010, it said.

A sprawling region, developing Asia includes 44 economies from the central Asian republics to China to the Pacific islands. The bank had earlier projected the region's growth to slow to 5.8 per cent this year from an estimated 6.9 per cent last year.

The worldwide downturn has hit export-driven economies particularly hard. From South Korea to Taiwan to Singapore, exports have plunged by double digits in recent months as American and European consumers spent less on cars and gadgets.

Mr Kuroda said on Monday the impact of the crisis could result in a spike in unemployment, slower growth rates and depressed stock markets.

Tight liquidity and credit could also hit small and medium enterprises, while a drop in remittances from overseas workers, which has been fueling domestic consumption in countries like the Philippines and Indonesia, could remove important social safety nets, Mr Kuroda said.

He said the ADB has responded by stepping up access to loans, grants and credit guarantees by several billion dollars from the originally planned US$12 billion for 2009. -- AP